“Ironwood’s strong performance during the third quarter was driven by
continued growth in LINZESS demand and brand profitability, growing
contribution from our linaclotide partnership in Japan, the DUZALLO
launch, and the advancement of our innovative development candidates,”
said Peter Hecht, chief executive officer at Ironwood. “Looking ahead,
we expect strong revenue growth, expanding commercial contribution and
financial discipline to propel us to positive cash flow during 2018. We
continue to invest prudently in R&D, and believe our development
candidates have the potential to deliver medicines addressing serious
unmet medical needs, accelerate growth and generate outstanding value to
both patients and shareholders.”

LINZESS. U.S. net sales, as reported by Ironwood’s U.S.
collaboration partner Allergan plc, were $190.9 million in the third
quarter of 2017, a 16% increase compared to the third quarter of 2016.
Ironwood and Allergan share equally in brand collaboration profits.

Total LINZESS prescription volume in the third quarter of 2017
included over 29 million LINZESS capsules, an 18% increase in
capsules compared to the third quarter of 2016, per QuintilesIMS.

More than 780,000 total LINZESS prescriptions were filled in the
third quarter of 2017, a 13% increase compared to the third
quarter of 2016, per QuintilesIMS.

Since the launch of LINZESS in December 2012, greater than 1.5
million unique patients have filled more than 9 million
prescriptions, per QuintilesIMS.

Net profit for the LINZESS U.S. brand collaboration, including
commercial and research and development (R&D) expenses, was $111.0
million in the third quarter of 2017, a 36% increase compared to
the third quarter of 2016.

LINZESS commercial margin was 66% in the third quarter of 2017
compared to 61% in the third quarter 2016.

Linaclotide Delayed Release. During the third quarter, Ironwood
and Allergan optimized the linaclotide life cycle strategy to more
effectively and efficiently support the achievement of the program’s
key objectives, which include: (1) strengthening the clinical profile
of linaclotide by obtaining additional abdominal symptom claims
including bloating and discomfort, two highly bothersome symptoms
associated with IBS-C, and (2) expanding the clinical utility of
linaclotide by demonstrating the pain-relieving effect of a delayed
release formulation of linaclotide in all IBS subtypes. Specifically,
the companies:

identified a shortened development path intended to obtain
additional abdominal symptom claims through a single Phase III
trial with LINZESS expected to begin in 2018; and

plan to advance linaclotide delayed release-2 (DR2) as a visceral,
non-opioid, pain-relieving agent for patients suffering from all
subtypes of IBS, including IBS-C, IBS-mixed and IBS with diarrhea.

The companies no longer intend to pursue linaclotide delayed
release-1.

Uncontrolled Gout

DUZALLO. In August 2017, DUZALLO was approved by the U.S. Food
and Drug Administration (FDA) for the treatment of hyperuricemia in
patients who have not achieved target serum uric acid levels with a
medically appropriate dose of allopurinol alone. DUZALLO became
commercially available in October 2017 and is the first FDA-approved
fixed-dose combination treatment that addresses both causes of
hyperuricemia in gout, over-production and under-excretion of serum
uric acid, in a single pill.

Ironwood paid AstraZeneca a $15.0 million milestone upon the
approval of DUZALLO during the third quarter of 2017.

ZURAMPIC® (lesinurad). In October
2016, Ironwood began commercializing ZURAMPIC in the U.S. for the
treatment of hyperuricemia in patients with uncontrolled gout who are
already taking a xanthine oxidase inhibitor (XOI), such as allopurinol
or Uloric® (febuxostat).

ZURAMPIC U.S. net sales were $0.7 million in the third quarter of
2017.

2,066 total ZURAMPIC prescriptions were filled in the third
quarter of 2017, per QuintilesIMS.

Uncontrolled Gastroesophageal Reflux Disease
(GERD)

IW-3718 is being developed for the potential treatment of uncontrolled
GERD.

In July 2017, Ironwood announced positive top-line data from a
Phase IIb clinical trial of IW-3718 in adult patients with
uncontrolled GERD. Data from the trial indicated that twice-daily,
oral dosing of IW-3718 1500 mg plus a proton pump inhibitor (PPI)
significantly reduced heartburn severity in patients with
uncontrolled GERD compared to patients treated with a PPI alone,
and that more than half of these IW-3718-treated patients were
responders with a clinically meaningful reduction in heartburn
severity. IW-3718 1500 mg was well tolerated in the trial. The
most commonly reported adverse event overall was constipation.

Ironwood has made important progress towards initiating Phase III
trials with IW-3718 1500 mg. Ironwood continues to expect the
trials to begin in the second half of 2018, pending end of Phase
II meetings with the FDA.

IW-1973, Ironwood’s lead investigational soluble guanylate cyclase
(sGC) stimulator, is being developed for the potential treatment of
diabetic nephropathy and HFpEF. Both diseases affect millions of
patients around the world, including an estimated eight million
Americans suffering from diabetic nephropathy and an estimated three
million Americans suffering from HFpEF. Diabetic nephropathy is the
leading cause of end-stage renal disease. There are few treatment
options available to markedly delay the steady decline of renal
function leading to dialysis or kidney transplant. HFpEF is a highly
symptomatic condition with high rates of morbidity and mortality, and
no approved treatments available. Ironwood initiated Phase II clinical
trials with IW-1973 in diabetic nephropathy and in HFpEF.

Diabetic nephropathy. A randomized, double-blind,
placebo-controlled, dose-ranging Phase II trial designed to
evaluate the safety and efficacy of IW-1973 in patients with
diabetic nephropathy. The trial is expected to enroll
approximately 150 patients. The primary endpoint is seeking to
assess the urinary albumin-to-creatinine ratio, an indicator of
kidney function in diabetic nephropathy.

HFpEF. A randomized, double-blind, placebo-controlled,
dose-ranging Phase II trial designed to evaluate the safety and
efficacy of IW-1973 in patients with HFpEF. The trial is expected
to enroll approximately 325 patients. The primary endpoint is
seeking to assess the effect of IW-1973 on peak exercise capacity.

Ironwood no longer intends to pursue IW-1973 in resistant
hypertension.

Data from two Phase IIa studies with IW-1973 in diabetic patients with
hypertension are expected by the end of 2017.

Sickle Cell Disease and Achalasia

IW-1701, Ironwood’s second clinical sGC stimulator, is being developed
for the potential treatment of achalasia and sickle cell disease.

Achalasia. Ironwood continues to enroll patients with
achalasia in a randomized, double-blind, placebo-controlled,
single-dose Phase IIa study of IW-1701. This study is designed to
evaluate the safety, tolerability, pharmacokinetics and
pharmacodynamics of IW-1701 in this patient population. Due to
slower than expected enrollment, data from this study are now
expected in 2018.

Sickle Cell Disease. Ironwood expects to initiate a
randomized, double-blind, placebo-controlled, dose-ranging Phase
II trial of IW-1701 in patients with stable sickle cell disease by
the end of 2017. The Phase II trial is expected to enroll
approximately 80 patients and is designed to evaluate the safety,
tolerability, pharmacokinetics and pharmacodynamics of IW-1701 in
these patients.

Global Collaborations and Partnerships

Ironwood’s partner, Astellas Pharma Inc., is commercializing LINZESS
for adults with IBS-C in Japan. In September 2017, Astellas submitted
a Supplemental New Drug Application with the Pharmaceuticals and
Medical Devices Agency in Japan for approval to market linaclotide for
the additional indication of chronic constipation.

Ironwood continues to expect the China Food and Drug Administration to
complete its review of the filing for approval to market linaclotide
in China for adult IBS-C patients in the first quarter of 2018.
Ironwood is partnered with AstraZeneca for the development and
commercialization of linaclotide in China.

Corporate and Financials

Total Revenues

Total revenues were $86.8 million in the third quarter of 2017
compared to $66.1 million in the third quarter of 2016. Included
in total revenues was $75.6 million associated with Ironwood’s
share of the net profits from the sales of LINZESS in the U.S.,
$9.5 million in sales of linaclotide API to Astellas, linaclotide
royalties, co-promotion revenue and ZURAMPIC revenue.

Operating Expenses

Operating expenses were $106.3 million in the third quarter of
2017 as compared to $94.4 million in the third quarter of
2016. Operating expenses in the third quarter of 2017 included
$6.1 million in cost of revenues, $37.1 million in R&D expenses,
$61.8 million in selling, general and administrative (SG&A)
expenses, $1.9 million in acquired intangible assets amortization
expenses, and a $0.6 million gain on fair value remeasurement of
contingent consideration.

Contingent consideration and amortization of acquired intangible
assets relate to Ironwood’s license agreement with AstraZeneca for
the exclusive U.S. rights to all products containing lesinurad.

Other Expense

Interest Expense. Net interest expense was $8.5 million in
the third quarter of 2017, primarily in connection with the $150
million 8.375% Notes funded in January 2017 and the approximately
$336 million convertible debt financing funded in June 2015.
Interest expense recorded in the third quarter of 2017 includes
$5.0 million in cash expense and $4.1 million in non-cash expense.

Loss on Derivatives. Ironwood records a gain/loss on
derivatives related to the change in fair value of the convertible
note hedges and note hedge warrants issued in connection with the
convertible debt financing funded in June 2015. A loss on
derivatives of $4.3 million was recorded in the third quarter of
2017.

Net Loss

GAAP net loss was $32.3 million, or $0.22 per share, in the third
quarter of 2017, compared to $33.2 million, or $0.23 per share, in
the third quarter of 2016.

Non-GAAP net loss was $26.7 million, or $0.18 per share, in the
third quarter of 2017, compared to $25.9 million, or $0.18 per
share, in the third quarter of 2016. Non-GAAP net loss excludes
the impact of mark-to-market adjustments on the derivatives
related to Ironwood’s convertible debt, as well as the
amortization of acquired intangible assets and the fair value
remeasurement of contingent consideration related to Ironwood’s
U.S. lesinurad license. See Non-GAAP Financial Measures below.

Cash Position

Ironwood ended the third quarter of 2017 with $225.4 million of
cash, cash equivalents and available-for-sale securities. Ironwood
used approximately $31.2 million of cash for operations during the
third quarter of 2017.

2017 Financial Guidance

Ironwood now expects:

R&D expenses to be in the low-to-middle end of the previously
guided $145 million to $160 million range;

SG&A expenses to be in the low-to-middle end of the previously
guided $235 million to $250 million range;

the combined Allergan and Ironwood total 2017 marketing and
sales expenses for LINZESS to be in the middle of the
previously guided $250 million to $280 million range; and

to use less than $110 million in cash for operations in 2017,
up from less than $100 million previously guided.

Ironwood continues to expect net interest expense to be
approximately $40 million.

Non-GAAP Financial Measures

The company presents non-GAAP net loss and non-GAAP net loss per share
to exclude the impact of net gains and losses on the derivatives related
to our convertible notes that are required to be marked-to-market, as
well as the amortization of acquired intangible assets and the fair
value remeasurement of contingent consideration associated with
Ironwood’s U.S. license agreement with AstraZeneca for the
exclusive rights to all products containing lesinurad. The derivative
gains and losses may be highly variable, difficult to predict and of a
size that could have a substantial impact on the company’s reported
results of operations in any given period. The acquired intangible
assets are valued as of the date of acquisition and are amortized over
their estimated economic useful life, and management believes excluding
the amortization of acquired intangible assets provides more consistency
with the treatment of internally developed intangible assets for which
research and development costs were previously expensed. The contingent
consideration balance is remeasured each reporting period, and the
resulting change in fair value impacts the company’s reported results of
operations. The changes in the fair value remeasurement of contingent
consideration do not correlate to the company’s actual cash payment
obligations in the relevant period. Management believes this non-GAAP
information is useful for investors, taken in conjunction with
Ironwood’s GAAP financial statements, because it provides greater
transparency and period-over-period comparability with respect to
Ironwood’s operating performance. These measures are also used by
management to assess the performance of the business. Investors should
consider these non-GAAP measures only as a supplement to, not as a
substitute for or as superior to, measures of financial performance
prepared in accordance with GAAP. In addition, these non-GAAP financial
measures are unlikely to be comparable with non-GAAP information
provided by other companies. For a reconciliation of these non-GAAP
financial measures to the most comparable GAAP measures, please refer to
the table at the end of this press release.

Conference Call Information

Ironwood will host a conference call and webcast at 8:30 a.m. Eastern
Time on Thursday, November 2, 2017 to discuss its third quarter of 2017
results and recent business activities. Individuals interested in
participating in the call should dial (877) 643-7155(U.S. and
Canada) or (914) 495-8552 (international) using conference ID number
1071726. To access the webcast, please visit the Investors section of
Ironwood’s website at www.ironwoodpharma.com
at least 15 minutes prior to the start of the call to ensure adequate
time for any software downloads that may be required. The call will be
available for replay via telephone starting at approximately 11:30 a.m.
Eastern Time, on November 2, 2017 running through 11:59 p.m. Eastern
Time on November 9, 2017. To listen to the replay, dial (855) 859-2056
(U.S. and Canada) or (404) 537-3406 (international) using conference ID
number 1071726. The archived webcast will be available on Ironwood’s
website for 14 days beginning approximately one hour after the call has
completed.

About Ironwood Pharmaceuticals

Ironwood Pharmaceuticals (NASDAQ:IRWD) is a commercial biotechnology
company focused on creating medicines that make a difference for
patients, building value for our fellow shareholders, and empowering our
passionate team. We are commercializing two innovative primary care
products: linaclotide, the U.S. branded prescription market leader for
adults with irritable bowel syndrome with constipation (IBS‐C) or
chronic idiopathic constipation (CIC), and lesinurad, which is approved
for the treatment of hyperuricemia associated with gout in patients who
have not achieved target serum uric acid (sUA) levels with a medically
appropriate daily dose of a xanthine oxidase inhibitor (XOI) alone. We
are also advancing a pipeline of innovative product candidates in areas
of significant unmet need, including uncontrolled gastroesophageal
reflux disease, diabetic nephropathy, heart failure with preserved
ejection fraction, achalasia and sickle cell disease. Ironwood was
founded in 1998 and is headquartered in Cambridge, Mass. For more
information, please visit www.ironwoodpharma.com
or www.twitter.com/ironwoodpharma;
information that may be important to investors will be routinely posted
in both these locations.

About LINZESS (linaclotide)

LINZESS® is the #1 prescribed brand for the treatment of adult patients
with irritable bowel syndrome with constipation (IBS-C) and chronic
idiopathic constipation (CIC), based on QuintilesIMS data. Since its FDA
approval in August of 2012 and subsequent launch in December 2012,
greater than 1.5 million unique patients have filled more than 9 million
prescriptions for LINZESS, according to QuintilesIMS.

LINZESS is a once-daily capsule that helps relieve the abdominal pain
and constipation associated with IBS-C, as well as the constipation,
infrequent stools, hard stools, straining, and incomplete evacuation
associated with CIC. The recommended dose is 290 mcg for IBS-C patients
and 145 mcg for CIC patients, with a 72 mcg dose approved for use in CIC
depending on individual patient presentation or tolerability. LINZESS
should be taken at least 30 minutes before the first meal of the day.

LINZESS is contraindicated in pediatric patients less than 6 years of
age. The safety and effectiveness of LINZESS in pediatric patients less
than 18 years of age have not been established. In neonatal mice,
linaclotide increased fluid secretion as a consequence of GC-C agonism
resulting in mortality within the first 24 hours due to dehydration. Due
to increased intestinal expression of GC-C, patients less than 6 years
of age may be more likely than patients 6 years if age and older to
develop severe diarrhea and its potentially serious consequences. In
adults with IBS-C or CIC treated with LINZESS, the most commonly
reported adverse event was diarrhea.

LINZESS is not a laxative; it is the first medicine approved by the FDA
in a class called guanylate cyclase-C (GC-C) agonists. LINZESS contains
a peptide called linaclotide that activates the GC-C receptor in the
intestine. Activation of GC-C is thought to result in increased
intestinal fluid secretion and accelerated transit and a decrease in the
activity of pain-sensing nerves in the intestine. The clinical relevance
of the effect on pain fibers, which is based on nonclinical studies, has
not been established.

In the United States, Ironwood and Allergan plc co-develop and
co-commercialize LINZESS for the treatment of adults with IBS-C or CIC.
In Europe, Allergan markets linaclotide under the brand name CONSTELLA®
for the treatment of adults with moderate to severe IBS-C. In Japan,
Ironwood's partner Astellas markets linaclotide under the brand name
LINZESS for the treatment of adults with IBS-C. Ironwood also has
partnered with AstraZeneca for development and commercialization of
linaclotide in China, and with Allergan for development and
commercialization of linaclotide in all other territories worldwide.

About ZURAMPIC (lesinurad) 200mg tablets

ZURAMPIC (lesinurad) works in combination with xanthine oxidase
inhibitors (XOIs) to treat hyperuricemia associated with uncontrolled
gout. ZURAMPIC is not recommended for the treatment of asymptomatic
hyperuricemia and should not be used as monotherapy. XOIs reduce the
production of uric acid; ZURAMPIC increases the excretion of uric acid.
Together, the combination of ZURAMPIC and an XOI provides a dual
mechanism of action that both decreases production and increases
excretion of uric acid, thereby lowering serum uric acid (sUA) levels in
patients who have not achieved target serum uric acid levels with XOI
treatment alone. ZURAMPIC selectively inhibits the function of
transporter proteins uric acid transporter 1 (URAT1) and organic anion
transporter 4 (OAT4), involved in uric acid reabsorption in the kidney.
The safety and efficacy of ZURAMPIC was established in three Phase III
clinical trials that evaluated a once-daily dose of ZURAMPIC in
combination with the XOI allopurinol or febuxostat compared to XOI
alone. The boxed warning for ZURAMPIC states that acute renal failure
has occurred with ZURAMPIC and was more common when ZURAMPIC was given
alone and reinforces that ZURAMPIC should be used in combination with an
XOI.

About DUZALLO (lesinurad and allopurinol)

DUZALLO (lesinurad and allopurinol) is a once-daily oral therapy that
contains lesinurad 200 mg plus allopurinol 300 mg; it is also available
in a lesinurad 200 mg plus allopurinol 200 mg dosage. DUZALLO is
approved by the FDA as a once-daily oral treatment for hyperuricemia
associated with gout in patients who have not achieved target serum uric
acid (sUA) levels with a medically appropriate daily dose of allopurinol
alone. DUZALLO is not recommended for the treatment of asymptomatic
hyperuricemia. Allopurinol is an XOI whose action differs from that of
uricosuric agents such as lesinurad. Allopurinol reduces the production
of uric acid (UA); lesinurad increases renal excretion of UA by
selectively inhibiting the action of URAT1, the UA transporter
responsible for the majority of renal UA reabsorption. The
dual-mechanism combination of DUZALLO can address both inefficient
excretion and overproduction of UA, thereby lowering sUA levels. DUZALLO
should be taken in the morning with food and water, and patients should
be advised to stay well hydrated when taking DUZALLO (about 2 liters of
liquid a day).

LINZESS Important Safety Information

INDICATIONS AND USAGE

LINZESS (linaclotide) is indicated in adults for the treatment of both
irritable bowel syndrome with constipation (IBS-C) and chronic
idiopathic constipation (CIC).

IMPORTANT SAFETY INFORMATION

WARNING: RISK OF SERIOUS DEHYDRATION IN PEDIATRIC PATIENTS

LINZESS is contraindicated in patients less than 6 years of
age. In nonclinical studies in neonatal mice, administration of a
single, clinically relevant adult oral dose of linaclotide caused
deaths due to dehydration. Use of LINZESS should be avoided in
patients 6 years to less than 18 years of age. The safety and
effectiveness of LINZESS have not been established in patients
less than 18 years of age.

Contraindications

LINZESS is contraindicated in patients less than 6 years of age due to
the risk of serious dehydration.

LINZESS is contraindicated in patients with known or suspected
mechanical gastrointestinal obstruction.

Warnings and PrecautionsPediatric Risk

LINZESS is contraindicated in patients less than 6 years of age. The
safety and effectiveness of LINZESS in patients less than 18 years of
age have not been established. In neonatal mice, linaclotide increased
fluid secretion as a consequence of GC-C agonism resulting in
mortality within the first 24 hours due to dehydration. Due to
increased intestinal expression of GC-C, patients less than 6 years of
age may be more likely than patients 6 years of age and older to
develop severe diarrhea and its potentially serious consequences.

Use of LINZESS should be avoided in pediatric patients 6 years to less
than 18 years of age. Although there were no deaths in older juvenile
mice, given the deaths in young juvenile mice and the lack of clinical
safety and efficacy data in pediatric patients, use of LINZESS should
be avoided in pediatric patients 6 years to less than 18 years of age.

Diarrhea

Diarrhea was the most common adverse reaction in LINZESS-treated
patients in the pooled IBS-C and CIC double-blind placebo-controlled
trials. The incidence of diarrhea was similar in the IBS-C and CIC
populations. Severe diarrhea was reported in 2% of 145 mcg and 290 mcg
LINZESS-treated patients, and in <1% of 72 mcg LINZESS-treated CIC
patients. If severe diarrhea occurs, dosing should be suspended and
the patient rehydrated.

Renal events: Adverse reactions related to renal function have
occurred after initiating ZURAMPIC. A higher incidence was observed at
the 400-mg dose, with the highest incidence occurring with monotherapy
use. Monitor renal function at initiation and during therapy with
ZURAMPIC, particularly in patients with eCLcr below 60 mL/min or with
serum creatinine elevations 1.5 to 2 times the pre-treatment value,
and evaluate for signs and symptoms of acute uric acid nephropathy.
Interrupt treatment with ZURAMPIC if serum creatinine is elevated to
greater than 2 times the pre-treatment value or if there are symptoms
that may indicate acute uric acid nephropathy. ZURAMPIC should not be
restarted without another explanation for the serum creatinine
abnormalities. ZURAMPIC should not be initiated in patients with an
eCLcr less than 45 mL/min.

Cardiovascular events: In clinical trials, major adverse
cardiovascular events (defined as cardiovascular deaths, non-fatal
myocardial infarctions, or non-fatal strokes) were observed with
ZURAMPIC. A causal relationship has not been established.

Adverse Reactions:

Most common adverse reactions with ZURAMPIC (in combination with an
XOI and more frequently than on an XOI alone) were headache,
influenza, blood creatinine increased, and gastroesophageal reflux
disease

Indication and Limitations of Use for ZURAMPIC

ZURAMPIC is a URAT1 inhibitor indicated in combination with an XOI for
the treatment of hyperuricemia associated with gout in patients who have
not achieved target serum uric acid levels with an XOI alone.

ZURAMPIC is not recommended for the treatment of asymptomatic
hyperuricemia

Known hypersensitivity to allopurinol, including previous occurrence
of skin rash

Warnings and Precautions:

Renal events: Adverse reactions related to renal function,
including acute renal failure, can occur after initiating DUZALLO.
Renal function should be evaluated prior to initiation of DUZALLO and
periodically thereafter, as clinically indicated. More frequent renal
function monitoring is recommended in patients with eCLcr < 60 mL/min
or with serum creatinine elevations 1.5 to 2 times the value when
lesinurad treatment was initiated. DUZALLO should not be initiated in
patients with an eCLcr < 45 mL/min. Interrupt treatment with DUZALLO
if serum creatinine is elevated to > 2 times the pretreatment value or
if there are symptoms that may indicate acute uric acid nephropathy,
including flank pain, nausea, or vomiting. DUZALLO should not be
restarted without another explanation for the serum creatinine
abnormalities

Skin rash and hypersensitivity: Skin rash is a frequently
reported adverse event in patients taking allopurinol. In some
instances, a skin rash may be followed by more severe hypersensitivity
reactions associated with exfoliation, fever, lymphadenopathy,
arthralgia, and/or eosinophilia including Stevens-Johnson syndrome and
toxic epidermal necrolysis. Associated vasculitis and tissue response
may be manifested in various ways including hepatitis, renal
impairment, seizures, and on rare occasions, death. Hypersensitivity
reactions to allopurinol may be increased in patients with decreased
renal function who are receiving thiazide diuretics and DUZALLO
concurrently. DUZALLO should be discontinued immediately at the first
appearance of skin rash or other signs that may indicate an allergic
reaction, and additional medical care should be provided as needed

Hepatotoxicity: A few cases of reversible clinical
hepatotoxicity have been reported in patients taking allopurinol and,
in some patients, asymptomatic rises in serum alkaline phosphatase or
serum transaminase have been observed. If anorexia, weight loss, or
pruritus develops in patients taking DUZALLO, evaluation of liver
function should be performed. In patients with preexisting liver
disease, periodic liver function tests are recommended

Cardiovascular events: In clinical trials, major adverse
cardiovascular events (defined as cardiovascular deaths, nonfatal
myocardial infarctions, and nonfatal strokes) were observed with
DUZALLO. A causal relationship has not been established

Bone marrow depression: Bone marrow depression has been
reported in patients receiving allopurinol, most of whom received
concomitant drugs with the potential for causing this reaction. This
has occurred as early as 6 weeks to as long as 6 years after the
initiation of allopurinol therapy. Rarely, a patient may develop
varying degrees of bone marrow depression, affecting one or more cell
lines, while receiving allopurinol alone. Patients taking allopurinol
and mercaptopurine or azathioprine require a reduction in dose to
approximately one-third to one-fourth of the usual dose of
mercaptopurine or azathioprine

Increase in prothrombin time: It has been reported that
allopurinol prolongs the half-life of dicumarol, a coumarin
anticoagulant. The prothrombin time should be reassessed periodically
in patients receiving coumarin anticoagulants (dicumarol, warfarin)
concomitantly with DUZALLO

Drowsiness: Occasional occurrence of drowsiness was reported in
patients taking allopurinol. Patients should be alerted to the need
for caution when engaging in activities where alertness is mandatory

Adverse Reactions:

The most common adverse reactions in controlled studies (occurring in
2% or more of patients on lesinurad in combination with allopurinol
and at least 1% greater than observed in patients on allopurinol
alone) were headache, influenza, blood creatinine increased, and
gastroesophageal reflux disease

The most common adverse reactions identified during post-approval use
of allopurinol are skin rash, nausea, and diarrhea

Indication and Limitations of Use:

DUZALLO, a combination of lesinurad, a URAT1 inhibitor, and allopurinol,
a xanthine oxidase inhibitor, is indicated for the treatment of
hyperuricemia associated with gout in patients who have not achieved
target serum uric acid levels with a medically appropriate daily dose of
allopurinol alone.

DUZALLO is not recommended for the treatment of asymptomatic
hyperuricemia

LINZESS® and CONSTELLA® are registered trademarks of Ironwood
Pharmaceuticals, Inc., and ZURAMPIC® and DUZALLO®are
registered trademarks of AstraZeneca AB. Any other trademarks referred
to in this press release are the property of their respective owners.
All rights reserved.

This press release contains forward-looking statements. Investors are
cautioned not to place undue reliance on these forward-looking
statements, including statements about the development, launch,
commercial availability and commercial potential of linaclotide,
lesinurad, our product candidates and the other products that we promote
and the drivers, timing, impact and results thereof; market size,
prevalence, growth and opportunity, including peak sales (and drivers
thereof) and the growth in and potential demand for linaclotide,
lesinurad and our product candidates, as well as their potential impact
on applicable markets; the potential indications for, and benefits of,
linaclotide, lesinurad and our product candidates; the anticipated
timing of preclinical, clinical and regulatory developments (including
strengthening the clinical profile and expanding the clinical utility of
linaclotide) and the design, timing and results of clinical and
preclinical studies; the potential for, and timing of, regulatory
submissions and approvals for linaclotide, lesinurad and our product
candidates; expected periods of patent exclusivity and life of the
respective patent portfolios for linaclotide, lesinurad and our product
candidates; commercial strategy; the strength of the intellectual
property protection for linaclotide, lesinurad and our product
candidates and our intentions and efforts to protect such intellectual
property; and our financial performance and results, and guidance and
expectations related thereto (including the drivers and timing thereof),
including expectations related to Ironwood revenue CAGR and revenue
growth, positive cash flow, LINZESS U.S. net sales, commercial margin,
ex-U.S. revenue, allocation of capital, R&D, SG&A and marketing and
sales expenses, net interest expense and cash used for operations. Each
forward-looking statement is subject to risks and uncertainties that
could cause actual results to differ materially from those expressed or
implied in such statement. Applicable risks and uncertainties include
those related to the effectiveness of development and commercialization
efforts by us and our partners; preclinical and clinical development,
manufacturing and formulation development; the risk that findings from
our completed nonclinical and clinical studies may not be replicated in
later studies; efficacy, safety and tolerability of linaclotide,
lesinurad and our product candidates; decisions by regulatory
authorities; the risk that we are unable to successfully integrate
lesinurad into our existing business, commercialize lesinurad or realize
the anticipated benefits of the lesinurad transaction; the risk that we
may never get sufficient patent protection for linaclotide, lesinurad
and our product candidates or that we are not able to successfully
protect such patents; the outcomes in legal proceedings to protect or
enforce the patents relating to our products and product candidates,
including ANDA litigation; developments in the intellectual property
landscape; challenges from and rights of competitors or potential
competitors; the risk that our planned investments do not have the
anticipated effect on our company revenues, linaclotide, lesinurad or
our product candidates; the risk that we are unable to manage our
operating expenses or cash use for operations, or are unable to
commercialize our products, within the guided ranges or otherwise as
expected; and the risks listed under the heading "Risk Factors" and
elsewhere in Ironwood's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2017, and in our subsequent SEC filings. These
forward-looking statements (except as otherwise noted) speak only as of
the date of this press release, and Ironwood undertakes no obligation to
update these forward-looking statements. Further, Ironwood considers the
net profit for the U.S. LINZESS brand collaboration with Allergan in
assessing the product's performance and calculates it based on inputs
from both Ironwood and Allergan. This figure should not be considered a
substitute for Ironwood's GAAP financial results. An explanation of our
calculation of this figure is provided in the U.S. LINZESS Brand
Collaboration table and related footnotes accompanying this press
release.

Weighted average number of common sharesused in net loss per
share — basic

149,502

145,180

148,695

144,474

Reconciliation of GAAP Results to Non-GAAP Financial Measures

(In thousands, except per share amounts)

(unaudited)

A reconciliation between net loss on a GAAP basis and on a
non-GAAP basis is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

GAAP net loss

$

(32,297

)

$

(33,204

)

$

(129,022

)

$

(68,203

)

Adjustments:

Mark-to-market adjustments on the derivatives related to convertible
notes, net

4,329

(4,541

)

1,191

(6,043

)

Amortization of intangible assets

1,897

3,213

2,738

4,278

Fair value remeasurement of contingent consideration

(628

)

8,667

7,919

8,667

Non-GAAP net loss

$

(26,699

)

$

(25,865

)

$

(117,174

)

$

(61,301

)

A reconciliation between diluted net loss per share on a GAAP
basis and on a non-GAAP basis is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

GAAP net loss per share – Basic and Diluted

$

(0.22

)

$

(0.23

)

$

(0.87

)

$

(0.47

)

Adjustments to GAAP net loss per share (as detailed above)

0.04

0.05

0.08

0.05

Non-GAAP net loss per share – basic and diluted

$

(0.18

)

$

(0.18

)

$

(0.79

)

$

(0.42

)

U.S. LINZESS Brand Collaboration1

Revenue/Expense Calculation(In thousands)(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

LINZESS U.S. net sales

$ 190,932

$ 164,379

$ 506,380

$ 451,980

Commercial costs and expenses2

64,034

64,136

215,174

197,841

Commercial profit on sales of LINZESS

$ 126,898

$ 100,243

$ 291,206

$ 254,139

Commercial Margin3

66%

61%

58%

56%

Ironwood’s share of net profit

$ 63,449

$ 50,122

$ 145,603

$ 127,070

Ironwood’s selling, general and administrative expenses4

10,456

7,491

34,061

25,523

Profit share adjustment5

1,677

2,370

1,677

2,370

Ironwood’s collaborative arrangement revenue

$ 75,582

$ 59,983

$ 181,341

$ 154,963

1 Ironwood collaborates with Allergan on the development and
commercialization of linaclotide in North America. Under the terms of
the collaboration agreement, Ironwood receives 50% of the net profits
and bears 50% of the net losses from the commercial sale of LINZESS in
the U.S. The purpose of this table is to present calculations of
Ironwood’s share of net profit (loss) generated from the sales of
LINZESS in the U.S. and Ironwood’s collaboration revenue/expense;
however, the table does not present the research and development
expenses related to LINZESS in the U.S. that are shared equally between
the parties under the collaboration agreement. For the three months
ended September 30, 2017, net profit for the U.S. LINZESS brand
collaboration with Allergan was $111.0 million, calculated by
subtracting $64.0 million in commercial costs and expenses and $15.9
million in research and development expenses, from LINZESS U.S. net
sales of $190.9 million.2 Includes cost of goods sold
incurred by Allergan as well as selling, general and administrative
expenses incurred by Allergan and Ironwood that are attributable to the
cost-sharing arrangement between the parties.3
Commercial margin is defined as commercial profit on sales of LINZESS as
a percent of total LINZESS U.S. net sales.4 Includes
Ironwood’s selling, general and administrative expenses attributable to
the cost-sharing arrangement with Allergan.5 Ironwood
or Allergan may recognize additional revenue or incur additional
expenses resulting in an adjustment to the company’s share of the net
profits as stipulated by the collaboration agreement.